Average property prices pass £250,000

Figures released by the Halifax show average house prices have passed £250,000 for the first time as buyers scramble to save on stamp duty.

The banks' house price index showed that average house prices increased by 7.5 per cent in the past 12 months, the fastest rate of growth in four years, hitting £250,547 at the end of October.

Russell Galley, from the firm, said that the sharp increase had resulted from a combination of pent-up demand from when the market was closed during the first lockdown and the temporary stamp duty waiver which expires at the end of March.

Growth has been driven by second and third-steppers and those moving into larger homes or into more rural areas after the initial lockdown, rather than first-time buyers. However, experts have warned that buyers who start the process now are likely to miss out on the waiver with a "bottleneck" meaning that less than half of deals will be completed in time to take advantage of the stamp duty break.

A leading mortgage broker commented, "It's likely that the heightened demand from buyers, and a race against the clock to meet the stamp holiday deadline was the driving force behind rising property prices last month. However, it's possible that those beginning their home ownership journey in October could still miss out on the tax break. A surge in demand has created a bottleneck of transactions and it's likely that around half of sales agreed after Oct 22 won't be completed in time to make the stamp duty holiday deadline. Our own data this week revealed that it currently takes around 115 days to get a mortgage and complete on a property in England."

The Halifax data showed signs that the housing markets "mini-boom" could be coming to an end with month on month house price growth slowing considerably. The cost of homes increased by 1.5 per cent in September but slowed to by just 0.3 per cent in October.

David Westgate, of estate agent Andrews Property, said: "On the surface, this is one of the greatest 'bull' runs in the British property market, but sadly a giant 'bear' is looming on the horizon. The market is now in cool down mode. Lenders have grown increasingly conservative in recent months and anyone with a small deposit now has a real struggle on their hands."

As the stamp duty holiday deadline passes and support schemes such as furlough and self-employment grants come to an end prices could fall by as much as 13.8 per cent next year, the Centre for Economics and Business Research think tank has warned.

Mr Galley said: "Government support measures have undoubtedly helped to delay the expected downturn in the housing market, but they will not continue indefinitely and as we move through autumn and into winter, the economic landscape remains uncertain. The renewed lockdown is set to be less restrictive but it bears out that the country's struggle with Covid-19 is far from over."